GCR Affirms Lasaco Assurance Financial Strength A(NG) Rating
GCR Ratings has affirmed Lasaco Assurance Plc’s national scale financial strength rating of A(NG), with the outlook maintained at stable.
According to GCR, the assigned rating reflects the strengths and weaknesses of Lasaco Assurance Plc and its two wholly owned subsidiaries: Lasaco Trading and Investment Limited and Lasaco Properties Limited, collectively referred to as the group.
The rating note released on Tuesday explained that the insurer is the core operating entity within the group, accounting for 99% and 81.6% of the group’s total assets and profit after tax as of 31 December 2024.
The rating affirmation reflects Lasaco’s sound risk-adjusted capitalisation and good liquidity position, supported by additional capital injection, according to GCR, noting that these strengths are partly offset by the insurer’s moderate market share and sustained weak underwriting performance.
Lasaco insurance risk-adjusted capitalisation remains a key rating strength, supported by a robust capital base relative to aggregate risk exposures.
As of 30 June 2025, shareholders’ fund increased by 84% to NGN22.1 billion, driven by an additional capital injection of NGN10.8 billion through private placement.
As a result, the GCR capital adequacy ratio (CAR) strengthened to 3.6x as of 30 June 2025 from 1.8x as of 31 December 2024 from 2.7x in 2023, underscoring the insurer’s improved loss-absorbing capacity.
From a statutory standpoint, Lasaco’s solvency margin registered at 3.7x as of 30 June 2025, a significant increase from 1.2x in December 2024- above the regulatory minimum of 1.0x.
“Over the next 12-18 months, we expect the GCR CAR to remain above the 2.5x, balancing the projected growth in insurance revenue against Lasaco’s plans for more capital to meet the new minimum capital requirement”, GCR said.
Rating analysts highlighted that Lasaco’s liquidity position was bolstered by the capital injection, with the insurer increasing asset allocation to cash and liquid instruments, which accounted for a higher 67.2% of the investment portfolio as of 30 June 2025 from 49.5% in 2024 year end.
As a result, the insurer’s liquidity coverage improved to 1.4x as of 30 June 2025 from 0.7x in December 2024, and ratings analysts expect this to remain at a similar range, predicated on consistent asset allocation to the relatively liquid instruments.
GCR view Lasaco’s asset allocation negatively, given the sizeable 25.2% of its investment portfolio concentrated in illiquid investment properties as at 30 June 2025 versus 38.9% in 31 December 2024: which have historically delivered rental yields of less than 1%.
Rating analysts stated that Lasaco is a mid-sized composite insurer in Nigeria, with a moderate market share of 1.6% as of 31 December 2024, a decline from 1.8% in 2023 and 2.0% in 2022.
Although Lasaco’s insurance revenue grew by 24.8% to NGN22.8 billion in 2024, rating analyst stated that the reduced market share reflects a slower growth relative to the industry’s average.
The rating note however noted that the insurer maintains a diversified business mix on the non-life segment, with six business lines each contributing more than 10.0% to insurance revenue.
However, they said this diversification is countered by sustained concentration in the life business, given the significant dominance of the group-life line of business at 99.8%.
Looking ahead, Lasaco’s retail penetration and digitalisation strategy could dilute policyholder concentration in the life business and support overall business growth over the medium to long term, GCR said.
The rating agency said Lasaco’s earnings profile is a major negative rating factor, constrained by its sustained weak underwriting performance over the last three years.
In 2024, the net claims ratio increased to 44.6% from 36.9% in the prior year, due to the inflationary pressures and the significant claims from the oil and gas business line.
Additionally, the operating expenses ratio was high at 55.5%, reflecting the elevated cost structure.
Ratings analysts’ revealed that higher business acquisition costs also pressured underwriting results, as reflected by a high net commission ratio of 60.7% as of 30 June 2025 from 19.8% in December 2024.
Consequently, the insurer registered a net loss of NGN731.5 million as of 30 June 2025, translating to a return on revenue of -6.6% from 8.8% in 31 December 2024 and 10% in 2023.
However, rating considered the improved investment income due to the high interest rates cushioned the underwriting results somewhat during the period.
“While we expect the underwriting deficit to persist over the outlook horizon, increased investment income from recent capital injections, alongside the adoption of more prudent underwriting practices, could support earnings resilience over the medium term”.
GCR said the stable outlook reflects expectations that Lasaco’s capitalisation and liquidity ratios could be sustained above 2.5x and 1x respectively, over the outlook period.
However, elevated claims, commission and cost structure may continue to pressure underwriting performance. Additionally, Lasaco’s weakening market position, with its share falling below 1.5x, may also be viewed negatively. #GCR Affirms Lasaco Assurance Financial Strength A(NG) Rating
